But I consider that these kinds of risks is where you have value added in being a pioneer; it takes a bit more work to understand what you're doing, but you actually make ot more money for what ends up being a reasonably transaction; whereas in transactions in the onshore sector, the risks are well known - but now in most cases wildly excessive from a sane banker's perspective.

Of course, once we show that it can be done, there will be a rush by other banks.

In the long run, we're all dead. John Maynard Keynes

Is this an indication that they are starting to integrate this aspect in their rating process?

Jesus died for somebody's sins but not mine - Patti Smith

Question is:

How many times does this thing have to play out over the years, with realively minor new twists, before governments and regulatory authorities get a clue?

"When the abyss stares at me, it wets its pants." Brian Hopkins

supposedly boring sectors like energy and infrasturcture.

While you hear about the liquidity bubble now and then, I had no idea about it going into energy and infrastructure. If there is one sector that has been subject to systematic underinvestment during the last 20 years it's these sectors.

Or am I wrong?

Peak oil is not an energy crisis. It is a liquid fuel crisis.

I'm thinking of what Agnes wrote: that this is a game with winners and losers, and until everyone is a guaranteed loser they'll keep playing it.  But I may have got that all sideways and backwards.

Don't fight forces, use them R. Buckminster Fuller.

Today we are in the same predicament with a big change. Banks have put the lid on speculation in the multi-residential housing industry. Not only that, but over the last 5 years it looks to me like the requirements for mortgages have become stricter, not looser.

In general, we try to keep our finger somewhat on the multi-residential housing market because we own one. Because we are interested in buying we have been sampling listings from across the country. Currently multi-residential prices are workable, if not great business investments, and given the restrictive lending practices of the banks, that is unlikely to change. The only exception to this is in Victoria and Vancouver where building prices are high enough that they do not work as a business. It is not clear to me if the banks are loaning more money there (I kind of think not.) or if there is a lot more money available for purchasing - more money down.

A second area that seems similar to what Jerome a Paris is talking about is insurance. Part of that is the insanely low rates people on the shoreline of the Gulf pay. Our insurance company raised our rates substantially over a few years to cover hits on the re-insurance (according to their claim) market. Interestingly we were able to get substantial savings on our rates by changing to a small local mutual company.

My thought is that if the banks try to pass on losses to the consumer - as they did when they started charging for all their services - that there still are alternatives to the major banks. It's why I bank at our local grocery store.

Ingenious and precarious schemes in the world economy today have great legitimacy, and they profit in the sense that classical economics is fast becoming irrelevant. It is the era of the fast talker and buccaneer-snake-oil salesmen in suits. Nothing old-fashioned has credibility. Joseph Schumpeter and other economists worried about pirates, but they are more important today than ever before, including than during the late 19th century when they were immortalized in Charles Francis Adams Jr's Chapters of Erie.

The leitmotif is "innovation", and many respectables are extremely worried. I argued in Counterpunch earlier (June 15 and July 26) that gloom prevailed among experts responsible for overseeing national and global financial affairs, especially the Bank for International Settlements, but I grossly underestimated the extent of anxieties among those who know the most about these matters.

More important, over the past months officials at much higher levels have also become much more articulate and concerned about the dominant trends in global finance and the fact that risks are quickly growing and are now enormous. Generally, people who think of themselves as leftists know precious little of those questions, questions that are vital to the very health of the status quo. But those most au courant with global financial trends have been sounding the alarm louder and louder.

The problem is that capitalism has become more aberrant, improvised, and self-destructive than ever. It is the age of the predator and gamblers, people who want to get very rich very quickly and are wholly oblivious to the larger consequences. Power exists but the theory to describe the economy that was inherited from the 19th century bears no relationship whatsoever to the way it operates in practice, a fact more and more recognized by those who favor a system of privilege and inequality.

Even some senior officials at the International Monetary Fund (IMF) now acknowledge that the theory that powerful organizations cherish is based on outmoded 19th-century illusions. "Reconstructing economic theory virtually from scratch" and purging economics of "neoclassical idiocies", or that its "demonstrably false conceptual core is sustained by inertia alone", is now the subject of very acute articles in none other than the Financial Times, the most influential and widely read daily in the capitalist world.

overextension, overcapitalisation, a mania for liquidity, compression of traditional financial cycles, expectation of ridiculously inflated returns, etc. are epidemic and not limited to one sector;  increasing shortages of commodities from fuel to food to water only increase the opportunities for short-term looting and gouging, which in turn exacerbate shortages (cf earlier thread on the crash of world fisheries).  an insane dogma of unlimited growth and contraphysical rates of return has led to insane expectations (some of which are realisable in the near term for a very limited number of players) which lead to insane behaviour including irresponsible risk taking (on every front -- financial, geopolitical, physical).

I note in passing that behavioural researchers have discovered that inconsistent, intermittent or arbitrary reward is more conditioning than predictable reward.  people and other animals will exert more effort and take higher risks to obtain a reward which is less predictable or certain than one which is predictable, even if the two rewards are of apparently equal value.  which is why gambling is addictive;  and there is a good reason why we call it "casino capitalism".


The difference between theory and practise in practise ...